CARES Act (Coronavirus Aid, Relief and Economic Securities) Act

UPDATE: 03/27/2020 7:00PM

There is SO very much in the CARES Act it’s hard to get it all here quickly, so this is just a quick run down of what I could do fast to get information out to you.  I will be adding to this as I continue to read summaries and the Act itself. This piece of the COVID-19 legislation is also referred to as Phase 3.

Basic Breakdown (Estimated)

  • $500 Billion for Corporations
  • $560 Billion for Individuals
  • $377 Billion for Small Businesses
  • $339.8 Billion for State & Local Governments
  • $153.5 Billion for Public Health
  • $43.7 Billion for Education / Other
  • $26 Billion for Safety net

What are Individuals Getting:  $560 Billion

This piece is broken up into 2 Spending parts (1) $300 Billion for Direct Cash Payments to People and (2) $260 Billion for Unemployment Assistance

The Part everyone has been waiting for:  One time Cash Payments into peoples pockets.  This supposed to start in approximately 3 weeks.  Based on your 2018 or 2019 Tax return, Single Tax payers earning upto $75,000 can expect payment of $1,200 and Married taxpayers with income upto $150,000 can expect twice that or $2400.  Taxpayers with Children can expect an additional $500/child  The payments are phased out to $0 when a single taxpayer reaches $99,000 or Married couple reaches $198,000.   

You must have filed a tax return in either 2018 or 2019, or be collecting Social Security in order to receive payment.  If you are a taxpayer who is not required to file because your income is below the filing threshold, you’ll want to file a tax return (even with no tax due) in order to qualify for payment.

2nd part of this allocation is the Extra unemployment payments.  There are 3 Important pieces to the Unemployment expansion:

First, this Provision adds $600/WEEK (yep, you read that right – I had to check twice) on top of what ever the worker receives from the State for Unemployment benefits for a period of upto 4 months.

Second, this piece of the legislation also adds 13 weeks of additional unemployment insurance to the states window for claims.  So if your state (like Wisconsin) provides for 13 weeks of Unemployment, the CARES Act increases that benefit to 26 weeks.

The Third piece of this is directed to Gig Workers and Freelancers.  Both Gig workers (ie Uber) and Self Employed Contractors can now file thru unemployment and can receive assistance through the end of the year through a newly created Temporary Pandemic Unemployment Assistance Program.

Other non-monetary things that this part of the Bill does is (a) Extend Tax Returns for 2019 and their payments out to a new due date of July 15th (b) Employers can also now pay upto $5,250 of an employees student Loan debt without having to add those payments to the employees income and (c) the bill requires that all private insurance plans cover COVID-19 treatments and Vaccines and makes all coronavirus tests Free!

What are Small Businesses Getting:  $377 Billion

For employers with less than 500 employees, this piece establishes Emergency Grants and Forgivable Loan programs. 

The Emergency Grant portion of this piece provides upto $10,000 in emergency funds to cover immediate Operating Costs including Payroll, Rent, and operating expenses.

Most of the money in this piece of the legislation comes in the form of Forgivable loans provided by the Small Business Administration in amounts upto $10Million.  Any portion of the loan that is used to maintain payroll and keep workers on payroll (except payroll under payroll paid under the expanded Sick Leave and EFMLA passed in Phase 2), or used to pay Rent or Mortgage and EXISTING debt could be forgiven provided that workers stay employed on the payroll through the end of June.  How much your business can get depends on the following:

  1. Must have less than 500 employees per Location
  2. Lenders will determine eligibility based on whether the business was operational as of February 15, 2020
  3. Loan amounts are available based on the lessor of
    1. Average Monthly Payroll costs during 2019 x 2.5 -or-
    1. $10 Million

The Federal Government will forgive these loans in an amount equal to what was spent on QUALIFYING expenses spent during the eight week period after the Loan Origination.   Qualifying costs are Payroll, rents, mortgages, utilities and debt in place prior to February 2020.

A Small 3rd piece in this piece of the legislation is $17billion in funds to cover six months of payments for businesses already using SBA Loans.

What are Big Businesses getting:  $500 Billion in Government Backed Repayable Loans

Although this piece is largely for Corporations, tucked in this piece of the bill is Fully Refundable tax credits to businesses of all sized that closed or are distressed to help them keep workers on the payroll.  The goal is to get them rehired and put on paid furlough protecting their jobs in the process.   The credit covers 50% of the payroll upto the first $10,000 of Compensation including Health benefits for each employee.  Under this provision though, they split the usage into 2 groups

  • Employers with over 100 employees can only receive credit for Wages paid to employees when they are NOT providing services due to COVID-19
  • Employers with Under 100 employees can use the credit even if they are not closed.

What does Public Health get:  $153.5 Billion

Because my focus in on Small business, I’m just going to mention what’s in this piece.

Hospitals, Community Health, CDC, Veterans, Telehealth, Medical Supplies and Drug Access is all addressed in this section

What does the Safety Get:  $26.0 Billion

Important pieces in this part:

  • Schools are getting $8.8 Billion for Student Meals
  • Food Stamps (SNAP) is getting additional $15.5 Billion
  • Food Banks are getting $450 Million for community food distribution programs

What does Education/Other get:  43.7 Billion

Although my focus of this is Employees and Small business, there is a couple things in this that effect the family and students.

  • Student Loans:  All Loan and Interest Payments are deferred through Sept 30 without penalty on Federal Student Loans
  • Work Study Funds:  Those funds that have unused funds can now use those funds for supplemental grants and continue to pay work study wages while schools are suspended
  • Students who had to drop out due to COVID-19 will  not have to pay back grants or other aid they received because they left school due to COVID-19

ADDED: 03/27/2020 4:35PM
Today the CARES ACT (Coronavirus Aid, Relief, and Economic Security Act) was passed. The document is 883 pages long. I’m working on a summary of information that will benefit both you personally and your company. Please stay tuned while I learn about what they did. I should have something up here by early tomorrow!

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